With the increased emphasis on mind/body programming, being healthy on the inside as well as looking good on the outside, and the increasing percentages of aging baby boomers looking for that much sought-after fountain of youth behind health club doors, the dietary supplement business is booming. Specifically, sports supplement sales are steadily heading north, which spells a golden opportunity for the club industry.
According to the “Sports Nutrition & Weight Loss Market Overview” published by Nutrition Business Journal (www.nutritionbusiness.com), the U.S. Nutrition industry produced $50 billion in sales in 2001 alone. The functional foods (FF) category (nutrition bars, sports and energy drinks, etc.) garnered 34 percent of these sales. Within this category, nutrition bars took in $1.38 billion (a growth increase of 21 percent over 2000) and drinks, $2.92 billion, for a total of $4.3 billion. The sports supplement category totaled $1.74 billion in sales, with $120 million coming in from “hardcore” beverages, $1.52 billion in sports powders and $100 million from sports pills. Weight-loss pill sales came to $1.88 billion, and weight-loss supplement sales totaled $2.02 billion. All in all, the weight-loss supplement market figures came to $3.9 billion. This $9.9 billion sports nutrition and weight loss (SNWL) market represents 28 percent of the combined U.S. supplement and FF markets.
Of special note to club owners: Looking at growth rates for the entire industry, sports supplements ranked number four in terms of highest growth rates for 2001 (8.8 percent), according to the Journal. Meal supplements, at number one, grew 9.5 percent over 2000 figures. Even more promising: 85 percent of all nutritional supplement sales were through retail (55 percent via mass market and 21 percent through other retail channels), according to Nutrition Business Journal. “In the sports nutritionals category, there is a little more active research so that may support [those sales statistics],” explains Phillip Harvey, the chief science officer for the National Nutritional Foods Association (NNFA), a trade association for natural products retailers and suppliers.
Health clubs, by the very nature of their business, should find the supplement business an easy sale for their members.
“[Health clubs] have a target market that is coming into the facility that is already interested in health,” says Tracy Taylor, NNFA's director of communications. “The Baby Boomers [one the fastest growing markets in health clubs today] seem to be holding on to the products to help them increase their energy and keep [in shape]. This group does not want to age. They want to maintain their youth.”
The only obstacle, then, is simply tapping into this already lucrative market by selling members supplements on-site at the club or online via the club's Web site. That, and deciding, among the plethora of choices available, what it is you're going to sell.
“As far as the drink market, there's a lot more competition coming in,” says Chris Lockwood, senior brand manager for American Body Building (ABB). “The residual effects for us though… we're seeing sales increase by nature of more people ordering the coolers. The fastest moving category that we have right now is the thermogenic and energy category, and also the shake business has increased.”
Due to the increased exposure, and legislation from the government, as well as increased research, sports supplements are reaching an all-time high among consumers. According to Jeffrey Stout, the director of sports science for the General Nutrition Center (GNC), director of sports nutrition of the Nutricia Institute of Sports Science, as well as co-editor of both the Sports Supplement Encyclopedia Edition 1, and Sports Supplements, nutritionals sales have increased since President Clinton signed the 1994 Dietary Supplement Health and Education Act (DSHEA) during his term (see www.hcrc.org/faqs/dshea.html for details on this Act). “Dietary supplement sales have gone down [or at least peaked], but sports supplements have continued to go up,” Stout says. “Due to the science out there… there are supplements out there that can enhance dietary goals while on an exercise program.”
In addition, according to Edgar Neytia, the chief executive officer of Elixir Tonics & Teas, the supplement industry has gotten “more focused,” with “growth happening in specific areas.”
With the health and fitness market relatively untapped, this leaves room for aggressive growth potential. You can see signs of this with increasing competition sprouting up among manufacturers, as well as with niche-specific products being marketed to specific populations. From more “hard core” protein bars (American Body Building, Worldwide Sports Nutrition, Met Rx), to mind/body detoxifying products (such as Sun Chlorella USA), to trendy herbal drinks (Elixir Tonics & Teas), there are supplement products to suit every need and for every club market — weight loss clinics, body building gyms, Pilates and yoga studios, personal training studios, day spas, etc.
“[Consumers] may see sports supplements as a good pair of weightlifting gloves or running shoes. It's another tool in their arsenal,” Stout says. Knowing that your club stocks them your customers will consider such tools a value-added convenience.
Knowing this, many big chains (such as Bally Total Fitness) carry their own supplement line, while others choose to work with brand distributors and carry the line in-house and online (Gold's Gym, for example). To make matters easier, many supplement companies will actually supply a free cooler for the club when the club agrees to sell its products. And while it's true that members can buy supplements at local health stores (i.e. GNC) for a discounted price that clubs can't compete with, clubs do have an ace in the hole when it comes to convenience. And consumers are historically willing to pay extra for this convenience, says Stout.
“The challenge is that there is so much noise out there and so many different kinds of supplements… for the consumer it's extremely difficult to sort through,” says Neytia. “Our biggest success is just getting people to try it.”
Marketing to Members
Giving out free samples is one way to get club members interested in buying supplements from your club, but another option to consider is where you are displaying the products. A big no-no is trying to sell supplements from behind the reception desk. You're more likely to end up with dust on the countertops than money in the cash register. “Don't do it. You never see this at convenience stores,” explains Lockwood. “[The consumers] want to be able to thumb through it.
“If it's behind the counter, you're going to miss out on a lot of sales,” he says. A good rule of thumb is to place any displays in high-traffic areas. For other display ideas, Lockwood advises going to your local convenience store and seeing how they arrange their products.
But having the right display — accompanied by in-house marketing, posters, advertisements, newsletters, and Web site mentions — won't help if you are not selling a product agreeable to your club's demographics. If you run a women's-only weight-loss clinic whose main client is 55-plus, chances are stocking creatine and protein powders won't bring your business singing to the bank. Likewise, colder climates may find chilly smoothies are not as popular as hot herbal drinks. Stocking the right product is a challenge that faces every retailer — whether you own a health club or a supermarket or a clothing boutique.
“There's a certain amount of consumer information out there. You can research it yourself but supplement [sales] are a sideline to the core business and most people don't want to get sidetracked,” advises Neytia. “Do a little research and find out what people want or find a company that fulfills those needs.”
Some manufacturers carry a variety of products for a variety of markets, and may be able to help you decide which of their products historically sells well to certain demographics.
“Our demographics are for an older lifestyle market because of the growing acceptance of health and prevention,” says Janis Van Tine, public relations representative for Sun Chlorella USA, which manufacturers a supplement containing the single-celled freshwater green algae chlorella, known for its health properties. In fact, this preventative health and wellness market opens even more opportunities for supplemental income for health clubs, particularly those catering to an older, well-educated market interested in holistic lifestyles.
According to the “AZU Report” by San Francisco, CA-based market research firm SPINS, conducted late last year, consumers are investing up to $300 billion in goods and services that offer health and well-being benefits. The Natural Business “LOHAS Report” has also tracked this trend, with statistics showing that consumers spend $30.7 billion annually on alternative healthcare, a category that includes health and wellness solutions, naturopathy and holistic disease prevention. Herbal products (teas, elixirs, powders, pills) all fall under this holistic umbrella.
“In the supplement industry, not just ABB, when you look across the board, there's a lot of different products for just about every possible market,” Lockwood says.
Besides researching the needs and wants of your own market, you'll also want to research the quality of the product and the quality of the company. If the company can stand behind its products, “they should provide [club owners] with information on the product's track record and safety record,” explains Harvey. In addition to looking at the labels on products to see what possible side effects can occur or ingredients the product uses (and researching those ingredients), club owners should ask the manufacturer to provide literature on the products. Many manufacturers provide third party literature, which contains information that is balanced and factual about the product, Taylor says.
Stout advises owners to ask to see a manufacturer's Quality Assurance papers, “but more simply, stick with a big, well-known company. But if you do choose a smaller company, make sure you do your homework.”
Before you sell any product, it's not a bad idea to check with your lawyer too.
Although the case is still pending, club owners should be aware of Crunch Fitness' legal troubles (Capati v. Crunch Gym, et al.). Crunch Fitness International (along with four supplement manufacturers, a retail store selling the supplements, and the personal trainer in question) is currently facing a $320 million wrongful death lawsuit by the family of a member who died after taking a supplement containing ephedra. Even though Crunch has a policy against selling or endorsing supplements, the family's lawsuit contends that the club's trainer recommended a supplement, sold at a Vitamin Shoppe store, containing the supplement, which caused a stroke when mixed with the member's prescribed medication.
Ephedra is a “performance booster” and is one of the most popular of the thermogenic dietary supplements, with an estimated 3 billion units sold annually. “Ephedra is safe under appropriate conditions,” says Stout. “Now if someone has heart problems or are on medication, that could lead to some problems.
“They would have to consult a lawyer about that. [The members] already have to sign a waiver if they're at the gym,” he continues.
As an added precaution, you could have members sign waiver forms when purchasing supplements. Your club's members need to be aware they are responsible for any purchases they make at your club.
Despite some risks associated with certain supplements, and competition from a number of sources, selling supplements to supplement your club's income is a solid financial investment worth looking into. Your members are already interested in health, and, most likely already buy nutrititionals on their own. By offering safe, quality products at the club, you are providing the member with a value-added membership, convenience and healthy lifestyle choices. And a boost to your own bottom line to boot.
SIZING UP SUPPLEMENTS
Tracy Taylor, the director of communications for National Nutritional Foods Association (NNFA), a trade association for natural products retailers and suppliers, ranks supplement products by popularity.
|1.||Pepsi (Gatorade, Allsport)||$1,180|
|7.||Ross Products (Ensure)||$270|
|9.||Nestle (Powerbar, Carnation)||$200|
|Source: Nutrition Business Journal's “Sports Nutrition & Weight Loss Market Overview.”|
|Company||Wholesale ($M)||% of Total|
|Sum of Top 8||$565||82.0|
|Total Wholesale Market||$770||100.0|
|Total Consumer Market||$1,380|
|Source: Nutrition Business Journal's “Sports Nutrition & Weight Loss Market Overview.”|
- Single ingredient vitamins (most popular: C, E and B)
- Single ingredient minerals (most popular: calcium, magnesium, chromium)
- Herbal formulas (most popular: garlic, ginko boloba, St. John's wort)
- Sports nutrition products (most popular: muscle growth and protein powders, sports bars, fat burners)
- Specialty Supplements (most popular: Joint health, anti-oxidants, weight loss)
- Amino Acids